Vandalia Capital II, LLC v. The Woods Development, LLC et al
MEMORANDUM OPINION AND ORDER granting 46 MOTION by United Bank to Intervene for the limited purpose of protecting its interests with respect to its loan, related instruments, and collateral; United Bank's motion to reconsider will be docke ted, and any responses thereto will be due by 3/23/2018, with reply due 3/30/2018. The Clerk is further requested to docket the Motion to Reconsider, ECF No. 46-1, and associated memorandum in support, ECF No. 46-2, attached as exhibits to the motion to intervene. Signed by Judge John T. Copenhaver, Jr. on 3/9/2018. (cc: counsel of record; any unrepresented parties) (taq)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
VANDALIA CAPITAL II, LLC
Civil Action No. 2:17-cv-02363
THE WOODS DEVELOPMENT, LLC
f/k/a/ IB DEVELOPMENT, LLC,
BASE GROUP INVESTMENTS, INC,
and MICHAEL L. SEALY
MEMORANDUM OPINION AND ORDER
Pending is a motion to intervene, filed by third-party
movant, United Bank, successor-by-merger to United Bank, Inc., on
December 15, 2017.
This action was brought by Vandalia Capital II, LLC
(“Vandalia”) against defendants The Woods Development, LLC
(“Woods”), formerly known as IB Development, LLC; Base Group
Investments, Inc. (“Base Group”); and Michael L. Sealy on April
Defendant Sealy filed for personal bankruptcy, and an
automatic stay was issued for all matters related to him pursuant
to 11 U.S.C. § 362(a).
See Notice of Bankruptcy by Michael L.
Sealy, filed June 8, 2017, ECF No. 19.
Count I of the First
Amended Complaint applied only to defendants Woods and Base Group,
while counts II and III applied only to defendant Sealy.
First Amended Complaint at pp. 9, 15, 18.
On August 25, 2017, the Clerk entered default against
defendants Woods and Base Group as to Count I of the First Amended
Complaint pursuant to Federal Rule of Civil Procedure 55(a).
ECF No. 29.
Vandalia moved for default judgment on September 29,
2017, and the court subsequently held five hearings on the matter.
See ECF Nos. 35, 38, 39, 40, 43, 44.
At the first of these
hearings, held October 13, 2017, Julia A. Chinchek appeared for
United Bank and stated the bank’s interest in what was then a
proposed agreed order.
After being provided a copy of the
proposed agreed order, Ms. Chinchek, by hand delivery to the
court, stated that United Bank “does not see anything on the face
of the [proposed agreed order] (excluding the incorporated
complaint) that characterizes or otherwise pertains to The Woods
Development’s or the underlying guarantors’ obligations to it.
Therefore, United Bank . . . does not have an opinion about the
[proposed agreed order].”
Ultimately, the parties could not agree upon the terms
of the proposed agreed order, and Vandalia prepared and tendered
the default judgment order that was entered by the court on
November 17, 2017.
See Judgment and Order, ECF No. 45.
Accordingly, the case was closed that same day.
and order that was entered was substantially different from the
proposed agreed order that Ms. Chinchek had reviewed and to which
she saw no problem with respect to United Bank.
record, Vandalia submitted a proposed default judgment order that
contained dozens of findings of fact and conclusions of law” many
of which “were irrelevant to the substantive claims in Vandalia’s
complaint and to the relief Vandalia sought from this court.”
Reply at 3.
United Bank had no notice of Vandalia’s proposed
order and was given no opportunity to seek review of the document
prior to its entry.
Movant United Bank now “seeks to intervene in this
action for the limited purpose of protecting its interests with
respect to its loan, related instruments, and collateral,” which,
it asserts, is implicated in the judgment and order entered
November 17, 2017.
Mot. Intervene at 1.
United Bank, Inc. made a
loan to Woods in the original principal amount of $28,212,594.00.
Mem. Supp. Mot. Intervene at 2.
If permitted to intervene, United
Bank wishes to file a motion to reconsider, asking the court to
vacate the previously entered judgment and order and enter an
amended version proposed by United Bank.
Id. at 1-2.
filed a response in opposition to the motion to intervene on
December 29, 2017.
II. Legal Standard
Intervention is governed by Federal Rule of Civil
Procedure 24, which allows for intervention as of right.
provides, in pertinent part:
(a) Intervention of Right. On timely motion,
the court must permit anyone to intervene who:
. . .
(2) claims an interest relating to the
property or transaction that is the
subject of the action, and is so
situated that disposing of the action
may as a practical matter impair or
impede the movant’s ability to protect
its interest, unless existing parties
adequately represent that interest.
Fed. R. Civ. P. 24(a)(2).
To intervene as a matter of right under
Rule 24(a), a movant must satisfy all four of the following
requirements: (1) the application must be timely, (2) the movant
must have an interest in the subject matter sufficient to merit
intervention, (3) the denial of intervention would impair or
impede the applicant's ability to protect its interest, and (4)
the movant's interest is not adequately represented by the
existing parties to the litigation.
See Fed. R. Civ. P. 24(a);
Houston General Ins. Co. v. Moore, 193 F.3d 838, 839 (4th Cir.
Timeliness is of special consideration in granting or
denying a motion to intervene, and wide discretion is given to the
district court in determining what qualifies as a Rule 24 “timely
Gould v. Alleco, Inc., 883 F.2d 281, 286 (4th Cir. 1989)
(citing NAACP v. New York, 413 U.S. 345, 365-66 (1973); Brink v.
DaLesio, F.2d 420, 428 (4th Cir. 1981)).
timeliness, “[a] reviewing court should look at how far the suit
has progressed, the prejudice which delay might cause other
parties, and the reason for the tardiness in moving to intervene.”
Gould 883 F.2d at 286.
“[L]ast-second or even post-judgment
intervention may be proper in some cases.”
It appears that United Bank meets all of these
First, United Bank’s motion is timely.
The motion was
filed less than one month after the entry of default judgment.
Though United Bank clearly had notice of the litigation and the
claims contained in the action, its interests were not implicated
until the entry of the judgment and order that contained
“erroneous findings of fact and conclusions of law,” based on the
First Amended Complaint, which “could impair [United Bank’s]
ability to collect on its loan.”
Mem. Supp. Mot. Intervene at 5.
United Bank did not have reason to intervene until it became clear
that its interests were implicated by this action, and they were
not implicated until the entry of the judgment and order.
United Airlines, Inc. v. McDonald, 432 U.S. 385, 394 (1977).
Further, the parties will not be unduly prejudiced by the
intervention because United Bank’s interest relates only to its
loan and not to the development agreement or transfer of the deed
to the real property at issue in the award of default judgment.
Accordingly, even though the case has been closed, this motion is
Second, United Bank has a clear interest in preserving
its ability to collect on the loan in accordance with the
applicable loan agreements.
Third, this interest is not
adequately represented by any of the parties to this action.
Finally, absent United Bank’s intervention, it would not be able
to protect its interest in its ability to recover on the loan.
Accordingly, it is ORDERED that United Bank’s motion to
intervene be, and it hereby is, granted for the limited purpose of
protecting its interests with respect to its loan, related
instruments, and collateral.
United Bank’s motion to reconsider
will be docketed, and any responses thereto will be due by March
23, 2018 with reply due March 30, 2018.
See L.R. Civ. P. 16.1.
Scheduling conference at 4:30 p.m. at the Robert C.
Byrd United States Courthouse in Charleston, before
the undersigned, unless canceled. Lead counsel
The Clerk is directed to forward copies of this opinion
directed to appear.
and order to all counsel of record order.
Entry of scheduling and any unrepresented parties.
Last day to serve F.R. Civ. P Motion disclosures.
The Clerk is further requested to docket the 26(a)(1)to Reconsider,
ECF No. 46-1, and associated memorandum in support, ECF No. 46-2,
The Clerk is requested to transmit this Order and
Notice to all counsel of record and to any unrepresented
attached as exhibits to the motion to intervene.
DATED: January 5, 2016
DATED: March 9, 2018
John T. Copenhaver, Jr.
United States District Judge
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